Cape Town -
Fidentia curator Dines Gihwala has been ordered by the Western Cape High Court to pay back about R6 million to a shareholder of another company he cheated out of money - and has been declared a delinquent director.
In effect, the delinquency declaration means he is disqualified from the office of director.
Gihwala resigned from his position with Fidentia on Thursday, the same day Judge Burton Fourie handed down the 115-page ruling that slammed Gihwala and Rivonia businessman Lancelot Manala for their behaviour as directors of Seena Marena Investments (SMI).
The pair were taken to court by Grancy Property, a shareholder in SMI, for misappropriating funds and breach of contract.
Gihwala said yesterday his legal team was abroad, and had not yet considered the ruling.
“Once they have, we’ll determine the way forward,” he said.
This week’s ruling comes after a lengthy process which went all the way to the Supreme Court of Appeal last year - just to determine if Grancy had a case to seek relief.
But the conflict has its roots in an agreement made nearly a decade ago.
Then, in 2005, Gihwala was a practising attorney, chairman of law firm Hofmeyr, Herbstein & Gihwala, managing trustee of the Dines Gihwala Family Trust, chairman of Ngatana Property Investments, and director of SMI since 2003 along with Manala.
He was appointed as an acting judge at the Cape High Court in 1997.
In February 2005, the pair formed an agreement with Grancy to have the property company join SMI. The three would each hold an equal share, and SMI itself would own 58 percent of Ngatana.
“In these circumstances, it is fair to say (Montague Goldsmith CEO Karim) Mawji, who is permanently resident in the United Kingdom, and Grancy, a foreign company, would be wholly reliant upon Gihwala and Manala to keep control of the investment and to protect Grancy’s interests,” Judge Fourie said in his ruling.
But those interests were never protected. Instead, Gihwala and Manala made a series of decisions and transactions over the years without consulting or informing Grancy, making what Judge Fourie called a “secret profit”.
l A March 2007 payment of R6m repaid by Ngatana to SMI. Manala got R1.35m of the amount. Gihwala, or his family trust, got over R2m. No payments were made to Grancy. Instead the pair used the R2m due to Grancy to make an investment in Strand/Scarlet Ibis Investments.
- Promotion fees of R225 000 each paid to Gihwala and Manala. Grancy was paid no promotion fee.
- R2.75m to both Gihwala and Manala as directors’ fees.
- About R1.11m paid to each as surety fees.
- R300 000 paid by SMI to Gihwala and Manala for personal legal expenses.
- In June 2007, without Grancy’s
knowledge, a loan of R2m was paid by SMI to Manala.
The director pair also failed to keep proper books of account, failed to allow Grancy access to the books and records, and failed to timeously pay dividends on Grancy’s 31 percent stake in the business.
Judge Fourie said the documentary evidence painted “a rather sad picture of an ongoing failure by SMI to keep proper books and records, while under the stewardship of Gihwala and Manala”.
“As submitted by Grancy, it is remarkable that, in a company which was to have but one asset (a 58 percent shareholding in Ngatana), to date no accurate or complete books of account have been brought into existence,” he said.
It was clear Gihwala and Manala “grossly abused” their positions as directors of SMI, said Judge Fourie, ordering the pair to jointly pay back the losses caused to Grancy - with a 15.5 percent annual interest rate. Even without interest, that amount is nearly R6m.
- Saturday Argus